The Crown Estate today reported a record income return of £304.1 million to Treasury for the public finances, with the offshore wind sector as one of the key performance drivers.
Income return was up 6.7% on 2015, while overall performance was significantly ahead of the market, with a total return of 17.2% against an IPD universe benchmark of 11.3% and a bespoke benchmark of 13.1%.
Offshore wind capital value grew by 26% to over £744 million from £589.8 million, with the sector now meeting around 5% of the UK’s electricity demand.
Alison Nimmo, Chief Executive of The Crown Estate said: “This year we’ve continued on the path of success. We have outperformed the market and benefitted from our team’s expertise and disciplined commitment to our core sectors. With markets continuing to be fully priced, we have secured our long-term sustainable growth through the active management of world-class office and retail destinations, the strength and timing of the largest development pipeline in our history, together with the UK’s world leading position in offshore wind.
“Looking ahead we remain cautious about the outlook for the market and are confident that with our focus on progressive management of high quality assets in the best locations, we have prepared the business for the challenges ahead.”
As the UK continues to be one of the most attractive places globally to invest in offshore wind, it has continued to be a key driver of commercial success for the business, according to the Crown Estate. Operational offshore wind assets generated £22.9 million, up nearly 20%.
With a total of 5.1GW of operational offshore wind and a development pipeline into the 2020s, asset management activity included signing over 1.5GW of leases in 2015 for four projects. These will start generating electricity in the years ahead, with a combined projected revenue of £6.8 million per annum, once they are at full capacity.
There are 29 offshore wind farms currently meeting around 5% of the UK’s electricity demand, with around the same number of turbines operating in UK waters – as there are in the rest of the world put together, the Crown Estate said. By 2020, the sector is on course to meet around 10% of the UK’s electricity demand and bring costs down below £100 per MWh.